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FTSE extends gains as US jobs data disappoint
by Gavin Lumsden on Oct 22, 2013 at 14:14
14.00: The FTSE 100 extended its gains as the key monthly US jobs report came in far lower than expected. The heavily scrutinised US non-farm payrolls showed 148,000 new jobs were created last month, well short of the 180,000 that forecasters had expected.
The report - delayed for two weeks by the government shutdown - does not reflect the impact of the Washington deadlock and so could be the prelude to more downbeat employment data next month.
Although disappointing, equity markets took the figures in their stride with the FTSE 100 trading 29 points or 0.4% higher at 6,683. The Labor Department figures confirm why the US Federal Reserve decided not to start tapering - or reducing - its huge stimulus programme in September.
Commodity and currency markets were less sanguine. Gold shot up over $12 to $1,328 an ounce as traders anticipated more dollar printing under quantitative easing. The dollar index, which tracks the greenback against a basket of leading currencies, tumbled 0.24% to 79.473. Sterling gained 0.11% to $1.6163 against the dollar.
There was some encouragement in the unemployment rate dipping a tenth of a percentage point to 7.2%, nearly a five-year low. The data was mixed, however, with the number of new jobs created in August revised upwards to 193,000 from 169,000 but revised down for July to 89,000 from 104,000.
It looks likely Fed officials will wait to see the economic affect of the shutdown before deciding whether to cut back the $85 billion it pumps into the US economy each month.
In Europe the FTSEurofirst 300 index drifted four points up at nearly 1,286.
FTSE holds gains ahead of delayed US jobs report
10.01: The UK’s blue chip index firmed 7 points or 0.1% to 6,661, starting its ninth consecutive day of gains. By contrast Europe stalled with the FTSEurofirst 300 flat at 1,281 after eight days of gains. Investors are looking to see what the US non-farm payrolls figure is at 12.30pm. The report, delayed by the recent government will influence how long the Federal Reserve holds off reducing its level of economic stimulus.
Mike van Dulken, head of research at Accendo Markets, ‘we expect the outcome to keep markets optimistic thanks to an accommodative Fed. The risk, however, is that this has already been priced in with the rally from early October based on a shutdown forcing the Fed to stick.’
Reckitt Benckiser (RB.L), the maker of Durex condoms and Lysol cleaner, led the way, shooting £2.58 or 5.8% higher to £47.60 after putting up for sale its pharmaceuticals unit, which has been hit by generic competition for its heroin addiction drug Suboxone.
Overall group like for like revenues rose 5% in the third quarter, helped by good health and hygiene product sales.
BHP Billiton (BLT.L) advanced 54p or 2.9% to £19.27 after pulling out of nine oil and gas exploration blocks in India it said could not complete. Investors were also pleased to see it raise its iron ore production target for next year and hit a quarterly record for petroleum output.
ARM Holdings (ARM.L) was the FTSE 100’ biggest faller, sliding 26p or 2.5% to £10.13, after a fall in loyalty revenue took the shine off an otherwise strong set of third quarter results from the computer chip designer. Its shares have risen 30% this year.
Renold (RNO.L) was the star among smaller stocks with the industrial engineer soaring 3.9p or 9.6% to 44.4p as it continues to recover from a profit warning a year ago. David Buxton of Finncap maintained his 'buy' rating as the company said in a half-year trading update that it expected to smash full-year forecasts.
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On the road
on Dec 06, 2013 at 14:28